The roof might last another year, the inspector told Paul Kuriakose. Kuriakose decided not to take any chances.
The roof was rotting on the building on Fountain Street, one of two adjoining brick apartment buildings Kuriakose and his wife Neelima Kaushal had just purchased on Fountain Street for $1.8 million.
He knew that the roof in the other building had been in similar shape when an historic snowstorm arrived three years earlier — forcing the fire department to condemn and evacuate the building.
So Kuriakose took his time. He discovered that 60 percent of the roof’s plywood was rotted, and he replaced it. He filled in the parking lot’s potholes and resurfaced the lot. He replaced the electric heating system with gas. Replaced all the windows, which leaked so badly that tenants had been paying up to $400 a month just for heat. Replaced all the refrigerators and cabinets and stoves, some of which dated back to the building’s 1963 construction. Put in new floors. And “lots and lots of paint.”
No one from the city had to fine him, or threaten to fine him, to do it.
He needed empty apartments to do all that work. When he finished, he charged the new tenants $1,200 a month for two-bedroom apartments that used to go for $875. Although, he noted, he includes heat and hot water — which used to come separate, and put some total monthly costs over $1,200 in the winter back when the apartments were pits to live in.
This week, a year and a half after purchasing the two brick apartment buildings at at 325 and 333 Fountain from investors connected to the Pike International rental empire (which managed the property), Kuriakose stood in the last renovated unit left unoccupied with a serene sense of accomplishment.
“The results of turning something that’s struggling into valuable properties,” he said, “is rewarding.”
Kuriakose, whose family moved to the U.S. when he was 7, didn’t expect to be spending his days renovating apartments. He had an IT career. He worked at a big company called The Hartford.
Then he and Kaushal, a private-practice ob-gyn, began dabbling in real estate as a side investment for retirement. Gradually they bought more properties, more challenging properties. And Kuriakose found he liked the challenge. He quit The Hartford and began managing the company’s properties full time.
In doing so, the couple has followed a different path from the fast-growing rental empires that have snapped up thousands of apartment units in New Haven over the past year.
Those fast-growing empires have sometimes attracted repeated complaints from city inspectors and neighbors for shoddy conditions. They are usually managed by companies whose principals find investors from other states and abroad to pour millions of dollars into buying low-income multi-family houses and apartment buildings. They usually set up individual limited-liability corporations (LLCs) on behalf of the investors for each property, which means if they get sued or incur crushing debts, credits cannot touch other assets. And they amass dozens or more properties in a year, hundreds or even thousands of units. Then they scramble to keep on top of repairs, handle tenant complaints, respond to repeated warnings or notices from the city building department and Livable City Initiative (aka LCI, the neighborhoods anti-blight agency).
Kuriakose and Kaushal, on the other hand, started slow, and haven’t hurried. In eight years they have acquired 16 properties in the Naugatuck Valley and in New Haven, for a total of 79 units. They bought almost all the properties with their own money in the name of one LLC, DKRK Properties, named after their children. (One property was purchased a separate LLC because Kaushal’s sister invested, and another at the request of a lender when they refinanced.) They’ve stayed away from the higher-end market as well as from poverty housing propped up by federal Section 8 rental subsidies. They have worked well with city inspectors without to date incurring a single fine or notice of violating the building code.
They have moved gradually, under the radar. They’re not amassing an empire. They may be raising the bar.
They have built the business in stages, at each point taking on new kinds of properties with increasing challenges.
“I started with a condo. Not a lot to do. Very easy,” Kuriakose, who is 53 and lives with his wife in Woodbridge, recalled of the first condo they bought as an investment property in Shelton in 2009. (They lived in Shelton at the time.)
Then they picked up a second condo. It required a little more work. But it was basically in good shape.
They bought a few more properties in Shelton, Derby, Ansonia, and Seymour, when someone in 2013 suggested they look at a 13-unit brick apartment complex and three-family house in New Haven, at 225 Fountain St. two doors up from Mauro Sheridan School. Kuriakose hadn’t before managed a project that large. He took a look: It seemed in good shape. Neighborhood seemed good. He decided to give it a try.
It helped that the previous owner had had the property for a long time. And was in the oil business. He had kept it up well. He showed Kuriakose all the details, offered tips on what to watch out for. Kuriakose and Kaushal paid $1.3 million for the property. And have kept it in good shape and occupied with working to middle-class renters; they pay $1,200 a month (including heat and hot water) for two-bedroom units. (The only complaint here during a visit there concerned the landlord’s decision to stop offering recycling. Kuriakose’s response: “People just kept putting trash in the bin. It was not worth paying extra for it.”)
They picked up some more multifamily houses in Westville as well as a couple in other city neighborhoods. They generally needed more work than the previous buildings. They picked up a Central Avenue three-family in an estate sale. For decades a restoration expert form the Yale Art Gallery had owned it and kept it in good shape for most of his time there. He even had a gallery of his own inside.
“Brilliant guy,” Kuriakose said. “Wish I could have met him.” But as he aged the home didn’t receive as much care. By the time Kuriakose took it over, he invested $60,000 in new floors, lights, and other improvements before returning it to its legally zoned three-family use.
The couple was sold on New Haven. “It’s a nice town. It’s easy to fill the apartments if you keep them in good shape,” Kuriakose said. And he decided he enjoyed “taking properties that are a little undermanaged and dilapidated” and reviving them. He found the work even has similarities to his IT job at The Hartford: “There’s a lot of problem-solving,” a lot of decisions about whether to invest money in “fixing a bug” or “working around it.”
Bigger challenges, more problem-solving, loomed when the couple plunked down the $1.8 million in September 2016 to purchase the pair of brick apartment buildings at 325-333 Fountain from Pike. (The above video is from the night 333 was evacuated because of the pending roof collapse.)
Pike had completed much of the major work on 333 after the snowstorm disaster. But 325 was in rough shape, according to Kuriakose.
He estimated that the leaking windows were the originals from the building’s construction 55 years ago. It needed new gas heat, all new appliances. Not to mention that new roof.
“They gave me a Ziploc bag with all the keys,” he recalled. “Some were labelled. Some weren’t.” He spent the first weekend just figuring out which keys opened which doors.
The repairs ended up costing close to $200,000 and taking a good year and a half to complete (though many of the units were ready sooner).
Now the couple has taken on a new project: a three-family house at the corner of Chapel and Day Streets across from Immanuel Baptist Church. The first floor is zoned for commercial use; Kaushal plans to move her ob-gyn practice there. The top two floors will remain apartments. The common areas and roof need “a good once over,” Kariokose said.
Kariokose said they plan to keep acquiring and fixing and managing properties. But they’re not in a rush, and they don’t have designs on amassing an empire.
“I’m thinking of stopping at 200 units,” he said. “And staying personally involved.”